Because the best things in life are free.

 
Serial Porkers

Something getting minimal press attention seems to be a confrontation between Rep. John Shadegg-AZ and Rep. Don Young-AK over “high priority projects” contained in the Transportation Equity Act of 2005. Shadegg asked Young (who wrote the bill) if Arizona’s portion could be directly conveyed to the state Department of Transportation and not diced up into “priority projects” by Arizona’s delegation. Offended, Shadegg turned down a slice of the pie for his own district and proceeded to vote against the bill.

This infuriated two Phoenix Council members who were hoping to use Shadegg’s allotment to upgrade previously rural roads that are now unable to handle the amount of traffic triggered by the city’s explosive growth.

Shadegg’s motivation might appear ideological or naïve, but he’s on to something. Bush originally drained the National Highway Transportation Fund for his initial “war chest” funding in 2001. He’s continued to reduce the amount of money provided by Washington and increased measures of compliance creating “unfunded mandates”. You can imagine that as much as he might consider projects in his districts justified, there could be other pork barrel spending he loathes. The biggest project in Arizona totaled $13 million for rail grading and underpass upgrading in Tucson. Second largest at $8 million was the extension of the Rio Salado Parkway from Tempe, Arizona west through southern Phoenix. Currently traffic bottlenecks across the Rio Salado from eastern Maricopa County are exacerbated by the lack of a direct route. Completing the Parkway would solve, apparently, many of those woes.

The big beneficiaries would be Arizona’s only two Democratic Congressmen, Ed Pastor and Raul Grijalva. But Shadegg just as easily could be upset at other, smaller dollar value projects which he believes have far less value to the community. Yet they all pale to Rep. Young’s monster pet project: a $125 million bridge between the Island of Gravina and Ketchikan, Alaska. Thus, Shadegg has to realize even if he got his way the tax cuts and structural deficits seen by the current Congressional fiscal policy would still leave Arizona scrambling for more money for infrastructure projects.

Notice that while Shadegg tries to appear principled about the matter, the rest of the Republican Congress indulges their penchant for pork while steadfastly ignoring the need to boost revenue. Oh well, John, at least you stood for something.
posted by Thomas at 10:47 PM 0 comments

 

posted by Thomas at 10:27 PM 0 comments

 
Pale Rider

No political issue proved more divisive for Democrats in the 1990s than free trade. It pitted the social liberals who wanted to encourage immigration against economic ones who favored controlled markets and powerful unions. But it also hinted that when the Republicans took control, they would face the yang to free trade’s yin: immigration. Now Hillary Clinton knows that the Republicans want to do what the Democrats did to free trade: split the baby. But she knows that won’t work and has not been afraid to mention tightening immigration in public. Everyone assumes that she does this because she wants to run for President in 2008: but look alive…it’s also extremely sweet revenge against many of these Republican Revolution generation lawmakers who pummeled her and her husband throughout the Clinton Administration.

Here at last is George W. Bush’s “NAFTA/WTO Spring”. Now in theory, there won’t be all that much drama. The House of Representatives approved an emergency war supplemental with an unusual rider about tougher immigration restrictions and now has to work out a compromise with the Senate. So as hard as it might be to find Republicans in the Senate raring to go about Social Security privatization…try finding fifty votes for this one.

After all, in December of 2004 House Judiciary Chairman James F. Sensenbrenner refused to put out another appropriations bill until heavy negotiation with the White House on these “restrictions”. This has the making to be even worse. But the Democrats can’t exactly smile. Most Americans think either party is afraid to crack down on illegal aliens. While undocumented workers are only part of the bigger picture on immigration, they elicit the most visceral response from the public. And that is the problem in a nutshell.

Throughout Bush’s time in office, attacking the most visceral fears of America has covered up for more structurally-oriented shortcomings. But on immigration there is no substitute for stopping its illegal form. The most effective way to do this has nothing to do with border security: suing employers who hire undocumented workers for tax evasion. Bush’s solution: a guest worker program.

Still, the amount of Republican fratricide ought to make for serious entertainment. Any Senator with 2008 aspirations now has to vote on this issue. Add the seeming helplessness of Bush against Sensenbrenner last December, and this could be a classic intra-party fight. And no one will smile in private more than Hillary Clinton herself.
posted by Thomas at 1:32 AM 0 comments

 
Here Kitty, Kitty

All this talk about how sleazy and corrupt some--okay--a good number-all right fine--a majority of Republicans have become sure has ignored Secretary of the Interior Gale Norton. After a whistleblowing scientist, Andrew Eller. at the Fish and Wildlife Service was fired (for criticizing how the agency was measuring the habitat of Florida's highly-endanger species of panther). The agency dragged its heels until lastweek, when the director resigned. (Most likely at Norton's behest.) But before he did, the agency filed a report acknowleding that Eller's criticism was accurate.

Now Florida might be stuck with thirty "mega-developments" in panther habitats. At first blush, it sounds like the only losers are the panthers themselves. But as endangered species, the owner or tenants of the developements can't harm the cats if they pass through. So imagine how much it will take to convice customers of these developments that panthers who idle around the parking lot are not a threat to their safety.

Of course the developers weren't going to tell their prosepective tenants about this if they could help it. Now it looks like the cat is out of the bag. And if Norton isn't careful, this will lead back to her other "pay-for-play" political deals and expose her for who she is.
posted by Thomas at 6:34 PM 0 comments

 
Eyes Wide Shut

No wonder Karl Rove expelled Deputy Secretary of State Paul Wolfowitz to the World Bank. Al Qaeda is on the march yet again, and this time they might be on to something. Even before Bush became President, most American foreign policy experts argued that lack of political freedom and poverty caused much of the political unrest in the Middle East. Thing is, some Arab nations have tried hard to moderate themselves, even without direct elections. Qatar founded Al-Jazeera; the UAE has boldly welcomed foreign investment, tourism, and even selling alcohol to nonbelievers. Through it all, increasing personal freedom has been a win-win situation.

But all that changed on Saturday. A longtime employee of the Qatar state petroleum company drove his bomb-ladden car into a theatre frequented by Western expatriates.

It is a real test of leadership. Does the Qatari government resist increasing personal freedoms or move ahead with its plan for elections? Probably not. But Doha, Qatar’s capital is a tantalizing target. Guest workers outnumber native Qataris. The US Central Command has it’s headquarters there. And it’s the hometown of Al-Jazeera. Dubai, with its huge resorts, and rapidly expanding airport would also suffer tremendously at the hands of terrorists.

Which is why the lack of comment by both the US Government and independent analysts is unnerving. Can the US afford to close its eyes one more time? Don’t bet it on it.
posted by Thomas at 10:15 PM 0 comments

 
Star Wars

Sequels, the addage goes, are rarely as good as the original. Which is why George W. Bush's attempt to ressurect the Reagan era fetish with space-oriented national defense programs is almost too funny. "The Phantom Menace" proved a dull shadow of Lucas's original three works, and Bush's attempts to emulate Reagan are nearly as comical. After all, the biggest jawboner in all of Congress, Tom DeLay, has been a stalwart supporter of NASA. The agency does many things--but everyone knows they put things into space.

But the Cold War idea of using satellites to shoot down nuclear-tipped warheads...that's been on the back burner. At first it appeared that nuclear proliferation was over...until India and Pakistan reminded us how quaint that idea was. But no one, except maybe the North Koreans were thought to be "crazy" enough to attack the US. And now of course, Al Qaeda seems eager to gain nuclear material. Just where they will find a willing nation and someone to sell them that ICBM to launch against the US...well Homeland Security isn't telling us.

So why the fascination, the enthrallment of the final frontier among people like Reagan and Bush? In a word: Sputnik. The Soviet Union beat the US into space, but America responded by landing Neil Armstrong on the moon twelve years later. Considering it occured during a very turbulent era for the US, it helped cement America's reputation in the world.

And in terms of the Bush's Kampf, a strong defense is the one luxury of the state. His desire for an imperious President, an eviscerated bureaucracy, a feckless Congress, a powerless judiciary, combined with states precluded from acting when the federal government elects not to is achieved by various means. They include devastating tax revenue, a permanent climate of uncertain and danger, and other milleu already associated with Bush today.

Left out is that through it all, the military and spending money on it provides excellent cover to run up huge deficits. Public outcry occurs when you attempt to "break the bank" spending money on other projects if the tax revenue isn't there. But as the Iraq conflict shows, you can use war to bankrupt the US and still win reelection. And if eventual bankruptcy means favoring NASA, the Bush team would argue, so be it.

Ironically, most of the money cut from the 2006 budget happens to be in areas of aeronatics research. Which implies that aircraft and air travel will become less safe, not more. It all causes one to think he or she has seen this movie before. Just as Reagan's legacy has corroded once exposed to daylight and fresh air, so too will Bush's cynical treatment of NASA and other agencies prove to discolor his reputation for decades to come.
posted by Thomas at 11:48 PM 0 comments

 
Exile to the World Bank

Why does Bush seek to exile Deputy Secretary of Defense Paul Wolfowitz to the World Bank? Can it be a coincidence that White House regulars are being exiled by these appointments left and right? Karen Hughes to the State Department, John Bolton to the UN, Wolfowitz to the World Bank... It all seems to suggest that Karl Rove is seriously consolidating his authority.

On the surface, everything is going well. The Democrats appear unable to stop any piece of legislation. The money continues to roll in...but this whole Social Security thing is not going as planned. Secondly, Iraq is now becoming a major headache. And don't forget the trouble with Tom DeLay. Rove's paranoia must be at a fever pitch.
posted by Thomas at 4:03 PM 0 comments

 
Richard Shelby Comes Clean on Social Security

Don't look now, but it appears even Republican Senator Richard Shelby of Alabama (also known as the super-leak on intelligence matters) confesses that the best way to save Social Security is tying the payroll tax cap to inflation. He also suggests that raising the retirement age is a good idea (impliedly because he has been able to carry on as a Senator into his 70s). Given the amount of blue collar workers in Alabama, that probably is not going to be popular. Still, his unequivocal rejection of Bush's privatization scheme is warming my heart.
posted by Thomas at 12:31 AM 0 comments

 

posted by Thomas at 11:56 PM 0 comments

 
The Spin Cycle

As successful as Karen Hughes was painting President Bush as a "compassionate conservative", who tapped her for this job at the State Department? She, Dina Powell, and Condi Rice are going to tackle the plummeting image of the US overseas. This is going to go over well in the Middle East. Remember the request of Crown Prince Abdullah when visiting Bush's Crawford ranch: please don't use any female air traffic controllers to bring in my jet.

Sure, you can send John Bolton to the UN as the anti-hero and look cool, but sending an all female team (among whom only Powell has much experience there) to the Middle East? Dwight D. Eisenhower and Richard Nixon must be turning over and over in their graves.
posted by Thomas at 2:02 AM 0 comments

 
The Myth of ANWR

Secretary of the Interior Gale Norton is putting on the full-court press. First, she appeared in a strange segment of “Hannity and Colmes” where the usually nasty Sean Hannity pitched her only softballs. Seeking affirmation from the other end of the spectrum, her March 14th editorial in the New York “Times” waxes poetic about the remarkable scientific advances in oil exploration. Norton has brought out the pom-poms and the creased skirt to root for ANWR drilling. Unlike other Bush appointees who have sometimes objected to their cheerleading duties…Norton probably has never met a strip mine she doesn’t like. She loves nature…but loves exploiting its resources even more.

Both sides in the “debate” over ANWR talk around realities. No one knows how invasive or difficult retrieving the oil would be. The techniques to explore have modernized, but they still might be spread out to the point that one surface location might not work. The caribou won’t mind crews trolling around the dark tundra in winter, but come summer they will have to adjust to any man-made improvements. On balance however, few good arguments seem to exist against “exploration”. Drilling is a whole other issue. Especially because that oil would be used to end our dependence on foreign sources.

That assumption, however, is false.

Most American oil companies are less than thrilled to try their luck. And even if they do, they are hardly obligated to sell what is recovered there to the US. Transcontinental oil pipelines are almost non existent in the US. Alaska is a long way by ship to New Orleans or East Coast hubs which serve the majority of America’s refineries. Add in an eventual decrease in the US population and it’s a paradox. Just as ANWR’s black bounty would reduce America’s burden on foreign sources, so will the country’s demand of oil and petroleum products also decline. So why is Norton so eager to forge ahead?

In a word: China.

Its state-owned oil companies have had difficulty buying fields in foreign countries. As a result, China has to buy much of its oil on the open market. The sense of desperation is so strong, that the China National Offshore Oil Company has signed deals with Iran and now the Sudan. Each poses a risky investment, given the tenuous future of each regime. ANWR is the exact opposite: a remote location in a completely stable country not that far away from Asia. But certainly, there would be much political opposition to allowing a Chinese state-owned company to plant its flag in Alaska. As a result, one of the three nationalized firms, CNOOC, Sino-pec and China National Petroleum Corporation, would likely set up a subsidiary in Hong Kong. Supporting Hong Kong erases much of the political opposition, but it also solves a few other problems.

China has a huge trade deficit with the US, meaning it has every reason to buy American Treasuries to stabilize the value of its own products. Hong Kong has a trade deficit with the US (though not very large). Hong Kong holds a the fourth-largest amount of US Treasuries. In fact, Hong Kong is unique for holding so many US bonds, despite its positive balance of trade. Unlike China, Japan, and other countries, Hong Kong selling her Treasuries would not affect its trade relationship with the US. If the Special Administrative Region started to sell ANWR’s oil however, every regime would likely pay in US currency. That would reinforce Hong Kong’s need to stockpile a certain amount of US currency.

Such a scenario is at ten to fifteen years away, however. It will take at least that long to investigate the viable areas for drilling, and then build the necessary infrastructure. That is why Norton suggesting that ANWR can do much to alleviate any current energy woes is disingenuous. The stark reality is that only Iraq has enough excess capacity to drive down the price of oil anytime soon. And retrieving it will require peace and stability, not technological advances.
posted by Thomas at 5:34 PM 0 comments

 
Swords to Plowshares

When former CIA analyst Michael Scheuer began appearing on TV to defend and promote his book, “Imperial Hubris: Why the West is Losing the War on Terror” he posited the same paradigm to every host. He said, “We have a choice between war and endless war”. No foreign policy expert could put it better. But don’t tell that to Rich Lowry, editor of “The National Review.” He’s all too eager to accuse “liberals” of being true defeatists of the Pax Americana. But in classic Lowry fashion, he never identifies which events in the Middle East or elsewhere demonstrate reasons for jubilation or at the very least, hope.

The greatest irony is that mere hours after writing his editorial, Chechen separatist Aslan Maskhadov was killed in a firefight with Russian troops. President Vladimir Putin is not celebrating. He does not assume that Russia’s war on terrorism is over. He no doubt remembers that Boris Yeltsin promised a short and easy conflict only to face a two year insurgency that only came to an end because of a Russian military withdrawal. When Putin, as Prime Minister, decided to reassert Moscow’s authority, Chechen tactics changed from standard resistance within the province to nationwide terrorist attacks. Despite Putin’s ability to use the conflict to tighten controls on the media, increase police powers, and expand the role of the Russian Presidency, the civilian body count continues to rise. This is because, as Scheuer would say, Putin chose endless war.

Liberals fear that the Bush Administration will also choose “endless war” because it provides the illusion of temporary victory but promises the reality of permanent defeat. Michael Tomasky, editor of “The American Prospect” said in an interview with the “New York Times” published last Sunday echoed this by suggesting that a two-state solution is not going to end violence between Israel and Palestinians. Lowry no doubt thinks Tomasky’s comment is sour grapes. Libya has renounced its weapons of mass destructions program, Iraq had free and fair elections, and Syrian troops are pulling back from Lebanon. And most importantly, there have been no major terrorist attacks in the United States since 2001. President George W. Bush deserves credit not just for Iraq, but all of it’s reverberations throughout the Arab world. But give the Arabs credit too. The Qatari government’s decision to invest in Al Jazeera was made long before Bush ever decided to run for President. Dubai’s investment in its Media City initiative also dates from 1990s. And then there is Bahrain, whose emir announced a referendum in early 2001 to turn the country into a constitutional monarchy.

Meanwhile the Karzai government in Afghanistan has less control of the country now than the Taliban did. Bush’s silence on the genocide in Sudan administered by an ethnically Arab regime is deafening. And there is apparently no American impetus to push freedom in oil-rich Central Asian republics like Kazakhstan. Lowry must not want to take credit for these “advances”, probably because they provide no instant gratification for Bush or the conservatives. Liberal commentary, by and large, will acknowledge these shortcomings (to suggest that the overall picture is a mixed bag) only to be assailed by the right for always “blaming America” and being “cynical”. At first it appears to be a Hobson’s choice: talk openly about what has gone wrong and be labeled a traitor, or discuss positive developments and be accused of not wanting to give Bush and the neoconservative strategists their due.

Michael Scheuer suggests that liberals focus on “exit strategies”. President Bush continues to move back the goalposts on Iraq. Osama bin Laden still evades capture. And while Al Qaeda has yet to perform an American encore, the organization’s reach has expanded from Africa and the Middle East to Europe and even Australia’s doorstep. Yet this has occurred despite acquiescence to bin Laden’s original casus belli : the American military presence in Saudi Arabia. Lowry and his kind would be quick to swoop on this, arguing that “we won’t know if we have won until we know”. But don’t bother asking what sign ensures victory: no conservative pundit has a clue.

Liberals should not bother to throw them a rope. Instead, liberals have to talk about what cannot be achieved through military means. You cannot bomb your way to democracy, even if it appears American military intervention in Iraq is causing authoritarian Arab regimes to liberalize some political processes. Moreover, you certainly cannot bomb your way to diverse, integrated economies. But no one likes to hear complaints without solutions. Simply reiterating failure is never political savvy, but describing shortcomings as opportunities for new ideas always is in fashion. Liberals, therefore have to explain how America (and the Arab world) can beat their swords into plowshares. And it’s not as hard as it might seem.

Iraq is full of archeological and historical treasures, preserving and rehabilitating them will help to attract tourists and foreign investment. Dubai’s role as the economic heart of the Middle East is buoyed in part by its heavy investment in the state-subsidized airline, Emirates. Negotiating an “open skies” agreement with Dubai and other countries that show progress towards democracy should be a priority. Al Jazeera’s ability to grow and provide jobs and revenue for Qatar and the Arab world is reliant on expanding its availability worldwide. Helping to broker the channel’s entry into the United Kingdom, Canada, and the United States would be a tremendous boost to Qatar and free speech in the Arabic-speaking world.

All of these initiatives would encourage the “swords to plowshares” methodology. And all of them have been ignored by the President or his Congressional allies. But most importantly, they encourage hope, even for liberals who are uncertain democracy alone will solve of all the Middle East’s ills.
posted by Thomas at 10:19 PM 0 comments

 
No Federalist Left Behind

How funny is it that the state that voted for Bush overwhelmingly (Utah) is threatening to junk all of No Child Left Behind. Read the Salt Lake Tribune here. What exactly happens if the state repudiates the statute? I suppose Bush could be like Eisenhower and send in the National Guard to force compliance on NCLB like Ike did "Brown v. Board of Education". But something tells me even Dubya is uncertain what to do. After all, once an exception is made with one state....the others shall be lining up to strike the law down.

But compliance without the means to coerce is equally divisive. The Federal Government through the Department of Education is not prepared to take over every American school. However, a national education program would not be the end of the world. But when you consider how big a chunk schools represent in each state's budget: that would be a tremendous expansion of federal government. And setting national standards or a curriculum still requires money unless you want another titanic unfunded mandate.

So don't be fooled. There is a strong possiblity this sort of exceptionalism by states will slice apart NCLB into a thousand parts. But it also will create an open question as to just what role the Bush Administration (and Congress) believes federalism plays in policy. Long eager to play fast and loose with the concept of federalism, the current Republican majority has run out of steam on the topic...at least in Utah.

And even if they resolve this dispute, there is still Medicaid, the current political widowmaker.
posted by Thomas at 11:58 PM 0 comments

 

Heads I win....tails you lose.... [White House photo by Paul Morse]
posted by Thomas at 12:46 AM 0 comments

 
Heads or Tails?

Given the fever pitch on Social Security and to a lesser extent bankruptcy reform, I can understand if the judicial nomination hearings on William Myers III are being ignored outside the Beltway. Unlike other appointments, Myers’s issues on civil rights and abortion are not in the cross-hairs. Instead, it is his record as the Solicitor of the Interior Department. Gale Norton has been on the Sierra Club hit list for a long time, and Myers was selected by her to be the top attorney for the DOI in 2001. Before he resigned, the DOI tried to end a contentious legal dispute with a man named Harvey Frank Robbins Jr. in Wyoming.

Robbins comes from a powerful industrial family in northwestern Alabama. And surprise, the elder Robbinses are big Republican donors. Junior arrived in Wyoming in 1994, buying the High Island Ranch near Hamilton Dome. The younger Robbins then began to acquire more land culminating with the purchase of the Owl Creek Land Company in 2000. About half the property was fee simple, meaning that the government held no reversionary interest. The other half was Bureau of Land Management leased property. Suffices to say, the BLM can impose regulations on the land it leases, even if you possess it and pay taxes. Robbins ignored every action the BLM would impose, if it was simply warning him for having cattle trespass other land he did not lease or if he had violated grazing quotas for his herd.

After reams of litigation, the DOI hashed out an agreement in Washington DC giving Robbins exemption from many BLM rules. The Inspector General of the DOI since 2001 fingers Myers. However, within two weeks, the inspector, Earl Devaney, claimed that his comments were not intended to single out the Office of the Solicitor. Myers denies he even had anything to do with the settlement to begin with…that of all people an assistant was in charge. So even if this is true, it’s a bit disconcerting that two $12,500 donations by Robbins’s father to the RNC in 2000 allowed the Interior Department in DC to supercede its own Bureau of Land Management. Even though Junior claims to be using his property as a tourist attraction, it probably hasn’t been so profitable as to pay for all this litigation.

It’s possible that Robbins thinks he can test for natural gas or oil perhaps if the BLM is out of the picture. (The Bureau would retain subsurface mineral rights to its land otherwise). Or perhaps Robbins senior had the chip off the old block buy these ranches as a way to hide corporate malfeasance over a decade ago. Then again, Junior could be just that eccentric or eager to be a legal trailblazer.

The DOI voided the agreement in 2004, and Myers resigned long before that. Now the Senate Democrats have to decide if they should invoke the filibuster again to stop his ascension to the Ninth Circuit.

Strategically this is a very tough decision. The Democrats are very close to killing the Bush Social Security privatization gambit. They would prefer to have it die without any perceived sleigh of hand. If the Democrats filibuster Myers however, Bill Frist as Majority Leader has threatened the “nuclear option”: reducing the number of votes needed for cloture of a filibuster from sixty down to fifty. The Democrats have promised to retaliate by using other mechanisms to bring the Senate to a screeching halt. It’s no idle threat.

But if used, it would diminish the impact of the legislation torpedoed by it. Bush is hoping by pushing his judicial nominees AND his Social Security programs that the Democrats will break ranks over which would deliver a more paralyzing defeat for Bush. And if that unity is interrupted, the White House figures both measures pass. The old, heads I win, tails you lose stratagem. And this does not even take into consideration the bankruptcy reform bill bobbing inside the Senate. For the Democrats might have to rely on the filibuster to stop it.

Harry Reid and others were hoping to kill Social Security first, poison pill the bankruptcy bill with an amendment by Charles Schumer about abortion (don’t ask)…and then save the filibuster card to drop Myers and send the Republicans throughout the nation into a tailspin. Don’t be fooled however, Bush is simply doing his best impression of General George Pickett. He knows the enemy lines are thin and if he can muster one more surge, he might break them. But the Democrats also know that they can drag out the bankruptcy bill all week and prevent it from passing. By that time, Bush’s version of Pickett’s Charge will collapse, and save the filibuster weapon until the next vote for Myers. Even if the bankruptcy reform bill passes, the vote need only be delayed until Bush’s energy is exhausted.

The President says that won’t be until he’s visited “60 cities in 60 days”. More like “sixty districts of vulnerable Congressmen in sixty days”. So far he’s visited: Fargo, ND; Great Falls, MT; Omaha, NE; Little Rock, AR; Tampa, FL; Blue Bell, PA; Raleigh, NC; Portsmouth, NH; Westfield, NJ; and South Bend, IN. Bradenton, FL; Roswell, NM; Anchorage, AK; Covington, KY; and Hamilton’s Dome, WY; can’t be far behind.
posted by Thomas at 12:37 AM 0 comments

 
One Tax to Rule Them All


Greenspan’s testimony this week to the House Budget committee continues to test one’s sense of disbelief. It’s one thing to honestly say you don’t think an Asia-wide sell off of US Treasuries is imminent, but it’s another thing to indirectly voice support for a consumption tax. Greenspan is saying the latter because the alternative minimum tax is projected to grab a larger number of Americans by the end of the decade. President Bush, (naturally) wants to abolish the AMT despite projections that it is the only mechanism to prevent limit structural deficits. In other words, the AMT’s future ability to generate revenue will limit how big the deficit can grow. If it is abolished, there is a serious potential for freefall.

Greenspan acknowledges that after reforms in 1986 there have been continued complications of rules and exemptions. Well, duh. Do you really think the people who can afford accountants are going to pay their fair share? Simplify the tax code is probably a good idea anyway, but consumption taxes will probably not get the job done. This is for the same reason that Bush loathes the AMT: no deductions. Unless you have consumption taxes with no deductions (like a VAT), deductions must be priced into marginal rates. Supporters of a national sales tax would find varying rates on what you buy: food might have none, but expensive items like homes or automobiles could have a 50% federal tax rate attached to them. The other option is to levy on tax rate on all purchases. Other countries do this, but apply a smaller rate over several times creating the value added tax or VAT. Prices would rise, but the most revealing impact would be reluctance to manufacturer or process goods in the US. Outsourcing would increase because importing ready-to-sell goods would limit the number of times the VAT could be assessed.

Which begs the question if there can ever be, with apologies to J.R.R. Tolkein, one tax to rule them all, and in the darkness bind them? As a matter theory, probably so. It just seems as a matter of practice that the political consequences would be so unsavory as to ensure it would never pass.
posted by Thomas at 3:28 PM 0 comments